-356-
 which vould tend. to brinir bout arbitrary uniformity in costs. In
 other words, each memberr of thi inruztry should connmuate his own over-
 hcnd o.. the basis of his own e.-erience.

 2. The method of .-Lvli.i overhp-d t') unit costs as r -nercentnge
 of "-rime cost is obsolete r..f sholIld. iot, therefore, rme.r in a cost
 rccouitini system to be ).*roved by the AcLiinistration. I would
 suL.est that overhcr.d be lid. i-- nit covts either .as a p-ercent.ge
 tf the direct lr"b")r cost, or !t .iven rate .er direct labor hour.
 I would person;,lly :-rcfer th.. ui7e f the second alternative.

 3. According to pagc five, direct nrteri-.ls shall be chr.rged
 into costs a.t the mn.r._et price )rev-iling}, ".t r.ny time within thirty
 days -Drior to the d-.te of s.le, or at -.ctu-.l cost if "murcha.sed within
 four months of the d-te of wlj, uhibhe'ej is the ,lower. This )ro-
 )ose.l restricts the scO')e of tte "cost or'raarket, whichever is lower"
.--rule rQqrybgd bh- Office I.Merior.nndumn 265. An individual manufacturer
 should be -)crmitted to chrr.e his ctc-rinls into -roduction at actu.l
 cost, rcordlcss of the dra.te of the -)urchbse of those .materials. No
 doubt, the Code Authoric- i., this -ironosa.l dishes to -.revent a manu-
 fa.cturer from producingg r.1n old invoice a.nd cl; im that the materials
 billed thereon were a.ctua-lly em--'loyed i;- the mrnuf.cture of the bag
 in question.
 f *i
 The following. revision o? the Code Authority's pro-iosal would
 bring it into ha.rmony V with Office IIe.,iorandum 265 rnd the snrme time to]o
 cprc of the situation which the Code Authority has in mind; "Price ali
 direct m.tcrinls for the cost formula at original cost or at the rrkei
 -)rice ,rcvailing at dr.te of sa.lc, whichever is the lower. A member
 who claims that his row ,rtcri.als were wurchrsed four months or more
 prior to the date of the snaL: must be -nre'-.red to -)rive'his contention
 from his -'-crpctual inventory or similar records. Otherwise, it is
 assumed thl.t the first ma.teri-,ls -u.rchrsed '.ere used in the mannufactura
 of the earliest lots of bu-gs."

 4. In order that ther- m-,- b'c no confusion, the following state-
 ment should r-(,.ar immedi-.tcly bclow the ca-,tion "Items not to be in-
 cluded in overhead or income" on P -o 11; "The ercense items shown
 herein sh-.ll be excluded in the determination of the costs below which
 sales sh.-.ll not be made."

 5. According to Pa-e 9, the cost of ren--irs to bmgs shall be in-J
 eluded i:i the f-ctory overhea.d expense. I!iny cost naczoutnnts would
 insist, with propriety, th-ft ^hc cecnrfscof reniairing bags should be
 listed as P selling -id rdiniritstr-.tivecrj,ense. The individual am-rnl-
... frcttc,...shpuld_ feel free to include the cost of reairing bags withI
 that classification, with the u.nderstr.nding, of course, thrt h pro- '
 3ortionate sa.re of Dhe factory overhead should be added to the items
 listed on PaL.o 9. Any income derived from the repriringC of bags shoul4i:
 of course, be -.-licd against the cost of repairing bags for the -nmrpotb
 of deter.iining th- amount which should be included in factory overheard
 or in the aldministrrtivc randl selling crnenses.

 6. According to Pace 9, the "de-)reciation" of the finished goods,
 inventory "t the close of the fiscal year should raiyparently be figuredd;

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